Should I Outsource Marketing or Bring it In-House?

One of the more ubiquitous questions facing senior marketing leaders at companies large and small continues to be “Do I outsource marketing or bring it all in-house?” The answers are a bit more nuanced than the question suggests and depend on numerous factors such as industry, whether you’re a B2B or B2C company, and what percentage of your company’s revenue goes to marketing.

Overall, corporate marketing budgets in the U.S. are on the rise. According to Gartner’s most recent survey (2017) of CMOs, “Companies with more than $5 billion in annual revenue tend to spend 13 percent of their revenue on marketing, versus 10 percent at smaller companies that have $250 million to $500 million in annual revenue.”

Marketing is More Complex Than Ever

The evidence shows that most organizations outsource some marketing functions while choosing to grow specific niches of marketing expertise internally. Part of what’s driving company willingness to outsource marketing functions is the industry’s continued fragmentation and splintering into specialties such as content marketing, inbound marketing, search marketing, social media, SEO, and on and on. This tapestry of specialties is often more than any single functional group can master alone, even with in-house experts.

Once more, the same Gartner Group survey found that “Forty percent of marketers say they planned to increase their use of agencies three to five years out.” And the reason? There’s a general perception that “agencies deliver superior quality or performance than in-house staff.” At the same time, however, some companies are also reporting a desire to bring more capabilities in-house to loosen dependence on external partners.

According to Entrepreneur, here are the three principal advantages of outsourcing your marketing:

Faced with these options, you can choose to work with multiple marketing partners, a single larger firm or work with one or two specialty departments within that large agency. For instance, larger agencies often have specialties like search marketing, video production or SEO.

7 Questions to Guide Your Decision Making

Confused about the best route for your firm—in-house or outsource? Gartner offers seven critical questions to ask yourself while you mull your options:

1. Essential Marketing DNA — Does the capability or resource support a proprietary marketing skill or potential differentiator, or provide a distinct competitive advantage?

2. Person or Function — Is the desire to support the capability or resource primarily driven by the desire for a human resource which can be used in multiple dimensions, or is the need primarily functional?

3. Recruitment and Retention Commitment — Is the organization committed to providing sufficient budget and other resources for the recruitment, compensation, and retention of talent?

4. Fit With Existing Organization — Would the addition of a capability or resource be perceived as complementary and additive to existing resources within the wider organization?

5. Elasticity — What are the desired speed and flexibility for the resource to be activated, scaled, reduced or discontinued?

6. Business Continuity — Would frequent turnover or erratic support of this capability create meaningful disruption or negative impact on the business?

7. Consider Cost as Part of Total Decision — How do the real costs compare? Always consider cost as part of the insource/outsource decision, but there isn’t always a clear connection between cost and whether you should outsource or insource.

Building a World-Class Marketing Capability

The tenets of marketing in the year 2018 are barely recognizable compared to the industry a decade ago. Marketing’s goals remain the same, but the tools of the trade have evolved to a point where it’s impossible for one person to master them all. For companies looking to create world-class marketing capabilities, the building blocks will most likely come from a broad range of sources.

A prescient David Packard may have seen this day years ago when he observed, “Marketing is too important to be left to the marketing department.”